Wealth Management Perspectives

Transcription

1 Wealth Management Perspectives

2 Why Choose Morgan Stanley Wealth Management With Over 80 years of Experience, We Help You Meet Your Goals at Every Life Stage A FIRM YOU CAN TRUST Doing business with integrity: We are committed to doing first class business in a first class way Global, broad capabilities: Morgan Stanley s capabilities provide an expansive platform giving you access to unique resources around the globe Putting clients first: We offer a wide range of data protections to our help our clients with cybersecurity GOALS-BASED SOLUTIONS Comprehensive solutions: We offer a wide selection of high quality funds from both Morgan Stanley and other managers to help you achieve your goals Managing your financial life & beyond: We go beyond investment advice, including lending and cash management Dedicated to individuals: We are focused on helping you build, preserve, and manage wealth through all life stages Page 2 of 32

3 A Firm You Can Trust Page 3 of 32

4 Doing Business with Integrity: A Focus on Core Values We believe capital can work to benefit all of society. We make this belief a reality by focusing on four key elements that comprise the core values of our firm: PUTTING CLIENTS FIRST DOING THE RIGHT THING LEADING WITH EXCEPTIONAL IDEAS GIVING BACK Always keep the client s interest first Work with colleagues to strive to deliver the best of the Firm to every client Listen to what the client is saying and needs Act with integrity Think like an owner to help create long-term shareholder value Value and reward honesty, collegiality and character Break new ground Let the facts and different points of view broaden your perspective Be vigilant about what we can do better Be generous with our expertise, our time and our money Invest in the future of our communities and our Firm Mentor our next generation Page 4 of 32

5 Morgan Stanley: Giving Back Morgan Stanley is rooted in communities around the world which means a unique opportunity to commit ourselves to philanthropy and public works $106 Million 56 Years 265,000 Hours 2 90% annually delivered to non-profits 1 of giving children the healthy start they need for lifelong achievement of volunteer services dedicated to non-profits of our employees globally participate in our philanthropic programs KEY INITIATIVES Morgan Stanley Foundation: For more than 50 years, we have supported healthy starts and solid educations for children. Morgan Stanley Children s Hospital: The Hospital sees over 50,000 patients each year and remains the top pediatric center in the NY area. Strategy Challenge: Our employees have delivered over 80,000 hours of pro bono service, valued at more than $12 Million, to 117 nonprofits. Global Volunteer Month: In 2016, employees volunteered nearly 300,000 service hours in 540 cities and 39 countries. Source: Morgan Stanley data 1.Amount includes total dollars delivered by the Firm and employees 2.YTD July 2017 Page 5 of 32

6 Morgan Stanley s Broad Capabilities With a diverse and talented workforce, extensive resources, sophisticated capabilities and global reach, we have a distinctive approach in helping you with your unique life goals Global investment manager delivering innovative investment solutions across public and private markets worldwide Investment Management Wealth Management A global leader dedicated to delivering services and solutions that help build, preserve, manage wealth and reach your goals Institutional Securities Group INSTITUTIONAL SECURITIES GROUP One of the world s top firms in M&A, equity underwriting and debt financing Morgan Stanley Smith Barney LLC ( Morgan Stanley ), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice Page 6 of 32

7 Global Resources, Local Expertise 1 Morgan Stanley is a respected financial services company with a diverse and talented workforce, extensive resources, sophisticated capabilities and global reach DIVERSITY & INCLUSION At Morgan Stanley, diversity is an opportunity for clients, employees and Firm. By valuing diverse perspectives, we can better serve our clients while we help employees achieve their professional objectives. A corporate culture that is open and inclusive is fundamental to our role as a global leader constantly striving for excellence in all that we do. JAMES GORMAN, CHAIRMAN AND CEO NORTH AMERICA Over 15,000 U.S.-based Financial Advisors and Private Wealth Advisors in 600 locations 2 Over 200 private bankers 3 EUROPE SOUTH AMERICA INSTITUTIONAL SECURITIES GROUP ASIA, MIDDLE EAST, AFRICA Over 55,000 employees in 43 countries 4 MS RESEARCH equity analysts cover ~3,400 stocks worldwide 53 fixed income strategists 40 equity strategists 34 economists AUSTRALIA 1. The map shows the location of offices where Morgan Stanley business has been conducted. Not all Morgan Stanley service and products are available at the locations shown, and the map showing these locations is subject to change without notice 2. Morgan Stanley Q Earnings Report. 3. Morgan Stanley Human Resources (9/13/16) 4. Source: 5. Morgan Stanley Research, as of 6/ Cerulli Associates. 2Q 2017 Summary, Managed Account Research. Rankings are subject to change. Page 7 of 32

8 Leveraging the Firm s Key Resources Our Platform Morgan Stanley is #1 among all firms in investment advisory assets under management. Our clients can benefit from the scope and scale of resources in evaluating and selecting investments that only an industry leader can provide: #1 IN INVESTMENT ADVISORY ASSETS UNDER MANAGEMENT 1 ($Bn) 1,001.4 Morgan Stanley Wealth Management Bank of America/ Merrill Lynch Wells Fargo Advisors UBS Wealth Management $1 Tn Assets Under Management 1 1,400+ Strategies Monitored per Year 450+ Onsite Manager Visits/Year #1 Managed Accounts Program by Assets 50+ Analysts Dedicated to Manager Analysis $2.3Tn In Total Client Assets (MS) 1. Cerulli Associates. 3Q 2017 Summary, Managed Account Research. Cerulli Associates data are based on data submitted by firms participating in Cerulli s survey. Morgan Stanley Wealth Management was ranked No. 1 in terms of assets under management out of the firms listed in the industry for the quarter with respect to Top Managed Account Program Sponsors Across All Industry Segments. This category includes separate account consultant programs, mutual fund advisory programs, ETF advisory programs, rep as portfolio manager programs, rep as advisor programs and unified managed account programs. Separate account consultant programs are programs in which asset managers manage investors assets in discretionary separate accounts. Mutual fund advisory programs and ETF advisory programs are discretionary and nondiscretionary programs designed to systematically allocate investors assets across a wide range of mutual funds or ETFs. Rep as portfolio manager programs are discretionary programs in which advice is an essential element; planning is undertaken or advice is treated as a separate service from brokerage. Rep as advisor programs are nondiscretionary programs where the advisor has not been given discretion by the client and must obtain approval each time a change is made to the account or its investments. Unified managed accounts are vehicle-neutral platforms that simplify the delivery of multiple investment vehicles, such as separate accounts, mutual funds, exchange-traded funds and individual securities through their integration within a single environment. Rankings are subject to change. CONSULTING GROUP INVESTMENT ADVISORY SOLUTIONS FOR TODAY S COMPLEX MARKETS CRC # (09/2017) Page 8 of 32

9 A Leader in Financial Services Our firm continues to be a leader, innovator and partner for successful individuals and their families, as well as for corporations, governments, foundations and endowments The Barron s Top 100 Financial Advisors rankings had our Financial Advisors taking more spots than any other firm on the list, including the top four spots 1 Morgan Stanley Prime Brokerage group ranked #1 overall for the fourth year in a row 3 Our retirement Financial Advisors secured 34 slots in the Financial Times list of Top Retirement Advisors in the U.S. 5 Morgan Stanley captured 54 spots on the Forbes America s Top Wealth Advisors list, including four of the top 10 2 Morgan Stanley named M&A Adviser and North America Financial Bond House of the year by International Financing Review 4 Euromoney Magazine named Morgan Stanley as World s Best Investment Bank, Asia s Best Investment Bank, Asia s Best Bank for Advisory, Best Bank for markets in North America, Best Bank for CSR in North America 6 1. Barron s Top 100 Financial Advisors, April Forbes America s Top Wealth Advisors, August The Financial Times, International Financing Review, December Financial Times FT 401 Top Retirement Advisors in the U.S., September Euromoney, July 2017 The awards/ratings listed above are based on quantitative and qualitative criteria. The awards/ratings may not be representative of any one client s experience and is not indicative of the Financial Advisor s future performance. Neither Morgan Stanley Smith Barney LLC nor its Financial Advisors or Private Wealth Advisors pays a fee in exchange for the awards/ratings. Page 9 of 32

10 Putting Clients First: Data Protection We are continually investing capital and resources in order to seek to protect your data CYBERSECURITY PROTECTIONS We seek to protect your assets and personal information from unauthorized access. We offer: Threat simulations and dedicated team regularly reviewing security processes Numerous investments in cybersecurity and fraud prevention technology Employee training on cybersecurity awareness and fraud protection policies and procedures Up to $1 Million in Identity Theft Insurance Coverage for clients enrolled in Premier Cash Management STRONG SYSTEM PROTOCOLS Robust encryption technology protecting information transmitted between your devices and Morgan Stanley systems Multi-factor authentication provides another layer of security in addition to your username and password Page 10 of 32

11 Goals-Based Solutions Page 11 of 32

12 Setting Goals According to Your Needs As your life stage changes, so do your goals our platform allows you to look across your assets and liabilities to help you adapt your strategy to meet those changing demands EDUCATION LIFESTYLE CHOICES LENGTH OF RETIREMENT CAREER PATH FAMILY DYNAMICS PURCHASE DECISIONS LEGACY PLAN EARLY / MID-CAREER Goals Buy a home Have a child Build an emergency fund Protect family LATE CAREER Goals Buy a larger home Send children to college Assist aging parents Plan for future healthcare Plan for retirement RETIRED Goals Maintain lifestyle and sufficient income Meet healthcare and other unforeseen expenses Buy a vacation home Legacy planning Assets Liabilities Goals Page 12 of 32

13 We Offer Comprehensive Solutions We help individuals manage their financial life, no matter the complexity of the specific situation WEALTH PLANNING Goals-Based Planning Retirement Strategies INVESTMENT ADVICE Thought Leadership Asset Allocation Portfolio Construction Investment Manager Selection INVESTMENT SOLUTIONS Advisory Brokerage Traditional Products Alternatives Annuities Investing with Impact LENDING AND CASH MANAGEMENT Residential Mortgage Loans Securities Based Loans Tailored Lending Morgan Stanley Cards (debit, credit, charge) Unlimited Check Writing Direct Deposit Premier Cash Management DIGITAL OFFERINGS Morgan Stanley Online Morgan Stanley Mobile App edelivery Bill Pay Transfers Mobile Check Deposit Authorizations Morgan Stanley Send Money with Zelle TRUST, ESTATE and LEGACY PLANNING 1 Wealth Transfer Strategies Wills, Trust, Estate and Legacy Planning Trust and Estate Professionals INSURANCE SERVICES Permanent Life Term Life Long-Term Care Disability PHILANTHROPY SERVICES 1 Charitable Lead Trusts Charitable Remainder Trusts Family Foundations Donor-Advised Funds 1. Although they may be admitted attorneys, planning directors and other wealth planning center personnel holding legal degrees are acting purely in a non-representative capacity. Neither they nor Morgan Stanley provide tax or legal advice to clients or to Morgan Stanley Page 13 of 32

14 Goals Planning System GPS Our integrated platform ties goals to implementation, leveraging the intellectual capital and sophisticated institutional capabilities of Morgan Stanley DISCOVER ADVISE IMPLEMENT TRACK PROGRESS Start with a conversation to uncover your goals and understand your entire financial picture Work with you to assess various scenarios and advise you on the appropriate strategies designed to meet those goals Look across multiple accounts/ products to identify the combination to help meet spending needs and invest taxefficiently Periodic review of your financial situation with the ability to make adjustments according to your needs, life events and changing market conditions 1 1. This functionality is currently limited and will expand with future phases of the tool. Page 14 of 32

15 Investment Advice: Providing Exceptional Guidance... THE STRENGTH OF A LARGE, GLOBAL FINANCIAL INSTITUTION As an advisor to institutions and individuals worldwide, Morgan Stanley has a pulse on capital markets and a vast network of industry contacts.... LEADING THINKERS The intellectual capital of Morgan Stanley s most experienced investment professionals is put to work in your portfolio. YOU BENEFIT FROM... EXCEPTIONAL ADVICE Morgan Stanley & Co. s in-house analysts and strategists cover over 3,400 companies. Proprietary models help you implement ideas.... MANAGER ANALYSIS Extensive analyses are conducted on hundreds of investment managers to verify they meet the high hurdles required for inclusion on our platform.... PORTFOLIOS TAILORED TO YOUR SPECIFIC NEEDS Research and recommendations across a wide range of asset classes, themes, models and investment managers is customized for your portfolio. Source: Morgan Stanley Research, as of 6/2017 Page 15 of 32

16 Investment Advisory Overview Morgan Stanley Wealth Management has a long history of providing advisory solutions and services to individual and institutional clients. Leveraging resources from across the firm, we provide access to advice and investment manager analysis while bringing clients a personalized and local perspective. KEY BENEFITS CLIENT FOCUS with nearly 45 years of experience in the industry advising clients on portfolio solutions DEDICATED TEAM of 50+ professionals focused exclusively on investment manager selection for the firm s investment advisory platform PROCESS-DRIVEN APPROACH that seeks quality managers and strategies with the goal of optimizing portfolio return potential in various market environments EXTENSIVE third-party manager due diligence, including comprehensive quantitative and qualitative tools used for all manager assessments INDUSTRY LEADERSHIP in product innovation tailored to clients needs ACCESS to exclusive Separately Managed Accounts and firm discretionary product offerings, available only to Morgan Stanley clients INSIGHTS from the firm s Global Investment Committee (GIC), to integrate asset allocation and thought leadership into advisory programs Page 16 of 32

17 Investment Solutions: A Suite of Investments Options You ll benefit from a comprehensive suite of products that encompasses both proprietary and third-party managers TRADITIONAL INVESTMENTS ALTERNATIVE INVESTMENTS INVESTING WITH IMPACT We offer: Mutual Funds Exchange-Traded Funds Closed-End Funds Unit Investment Trusts We offer: Hedge Funds Funds of Funds Managed Futures Real Estate Private Equity Private Credit Exchange Funds We offer across the traditional and alternative spectrum: Investing with Impact Portfolio Solutions Investing with Impact Products Investing with Impact Tools & Resources 1. Source: Morgan Stanley Wealth Management Alternative Investments Group. As of January 31, Source: Morgan Stanley Global Investment Manager Analysis team. As of January 31, Morgan Stanley Institute for Sustainable Investing Sustainable Signals, February 2015 Page 17 of 32

18 Investment Solutions: A Flexible Payment Approach CHOOSE WHAT S BEST FOR YOU A personalized approach to wealth management BROKERAGE RELATIONSHIP (commission-based) We execute transactions based on your buy, sell and hold decisions. ADVISORY RELATIONSHIP (fee-based) We help you select investments and programs that best align with your goals. Page 18 of 32

19 Lending and Cash Management Solutions When used in combination, our Lending and Cash Management solutions work together to provide a broadbased view of your finances and complement your existing investment strategy Lending solutions can help: Finance almost any personal, real estate or business need Access a flexible line of credit Keep assets invested in the market Your Financial Advisor supported by a Private Banker and a team of specialists LENDING CASH MANAGEMENT Cash management solutions can help: Manage day-to-day finances more efficiently Track everyday spending to budget Conveniently deposit and access funds View your complete financial picture Page 19 of 32

20 Digital Offerings: Connect Your Way An integrated suite of apps and tools that provides Morgan Stanley clients freedom, access and information Morgan Stanley Online allows you to conveniently and securely manage your account online or on your mobile device. View account balances, activity, holdings, projected income and more Access the latest news and market research Go Green with e-delivery for statements, confirms and more Easily update your profile and account information Conveniently manage your daily finances with bill pay, check and debit card orders, fund transfers, eauthorizations for wires and more 1 Invest using our new digital investment platform built to help you reach your goals: Morgan Stanley Access Investing. Access your account wherever, whenever using the Morgan Stanley Mobile App. The Mobile App also offers features to help simplify your everyday finances including mobile check deposit and Send Money with Zelle, the new and convenient way to send and receive money. To register for an online account, visit morganstanley.com/online. 1. Up to a daily limit of $250,000 for existing Reserved customers. Morgan Stanley Smith Barney LLC, member SIPC, reserves the right to change or terminate the Reserved program at any time and without notice. Reserved program participants accounts and activity are reviewed periodically to confirm that they continue to qualify for Reserved Page 20 of 32

21 Trust, Estate & Legacy Planning: Transferring Values and Wealth We provide access to the broad range of services needed to create an enduring legacy that passes along your values as well as your assets Estate Planning Life Insurance Next Generation Education Family Mission Statements Succession Planning CLIENT Document Reviews 1. Although they may be admitted attorneys, planning directors and other wealth planning center personnel holding legal degrees are acting purely in a non-representative capacity. Neither they nor Morgan Stanley provide tax or legal advice to clients or to Morgan Stanley. Page 21 of 32

22 Insurance Services: Crafting a Custom Strategy to Manage Risk We screen providers and products to offer you a broad range of quality insurance and annuity options Morgan Stanley Annuity & Insurance Product Due Diligence Committee Initial Review & Approval Approved: Life, Disability, Long-Term Care & Annuities Options Ongoing Monitoring A rigorous set of standards is applied to providers and products: INSURANCE PROVIDERS INSURANCE PRODUCTS Financial strength Disclosure of all product features Credit ratings Comparison with comparable product offered by other providers Ownership and organizational structure Product design Investment policies Cost and suitability Insurance and annuity products are offered in conjunction with Morgan Stanley Smith Barney LLC s licensed insurance agency affiliates. Page 22 of 32

23 Philanthropy Management: Fulfilling Your Charitable Aspirations Our professionals can help you identify, organize and implement a philanthropic strategy to effect the change you want to see in the world ROBUST EXPERIENCE We work with ultra-high net worth families, their foundations and the institutions they support. RESEARCH ORIENTED We help you identify and connect with high-impact charities that complement your philanthropic goals. YOUR PHILANTHROPIC GOALS SPECTRUM OF RESOURCES We provide advisory services and implementation strategies to help you define and execute your philanthropic mission. GIVING PLATFORMS We offer a variety of giving solutions including a donor-advised fund and a foundation management services. 1. Although they may be admitted attorneys, planning directors and other wealth planning center personnel holding legal degrees are acting purely in a non-representative capacity. Neither they nor Morgan Stanley provide tax or legal advice to clients or to Morgan Stanley Page 23 of 32

24 Getting Started: Understanding What s Most Important to You You, your family and the important people in your life Goals, such as saving for a home, education for your children and retirement Your comfort level with different types of risks Your vision of financial security and success Page 24 of 32

25 Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be suitable for all clients. Any product discussed herein may be purchased only after a client has carefully reviewed the offering memorandum and executed the subscription documents. Morgan Stanley Wealth Management has not considered the actual or desired investment objectives, goals, strategies, guidelines, or factual circumstances of any investor in any fund(s). Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Morgan Stanley Smith Barney LLC offers investment program services through a variety of investment programs, which are opened pursuant to written client agreements. Each program offers investment managers, funds and features that are not available in other programs; conversely, some investment managers, funds or investment strategies may be available in more than one program. Morgan Stanley s investment advisory programs may require a minimum asset level and, depending on your specific investment objectives and financial position, may not be suitable for you. Please see the Morgan Stanley Smith Barney LLC program disclosure brochure (the Morgan Stanley ADV ) for more information in the investment advisory programs available. The Morgan Stanley ADV is available at Sources of Data. Information in this material in this report has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy, completeness or timeliness. Third-party data providers make no warranties or representations relating to the accuracy, completeness or timeliness of the data they provide and are not liable for any damages relating to this data. All opinions included in this material constitute the Firm s judgment as of the date of this material and are subject to change without notice. This material was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Some historical figures may be revised due to newly identified programs, firm restatements, etc. Global Investment Manager Analysis (GIMA) Focus List, Approved List and Tactical Opportunities List; Watch Policy. GIMA uses two methods to evaluate investment products in applicable advisory programs: Focus (and investment products meeting this standard are described as being on the Focus List) and Approved (and investment products meeting this standard are described as being on the Approved List). In general, Focus entails a more thorough evaluation of an investment product than Approved. Sometimes an investment product may be evaluated using the Focus List process but then placed on the Approved List instead of the Focus List. Investment products may move from the Focus List to the Approved List, or vice versa. GIMA may also determine that an investment product no longer meets the criteria under either process and will no longer be recommended in investment advisory programs (in which case the investment product is given a Not Approved status). GIMA has a Watch policy and may describe a Focus List or Approved List investment product as being on Watch if GIMA identifies specific areas that (a) merit further evaluation by GIMA and (b) may, but are not certain to, result in the investment product becoming Not Approved. The Watch period depends on the length of time needed for GIMA to conduct its evaluation and for the investment manager or fund to address any concerns. Certain investment products on either the Focus List or Approved List may also be recommended for the Tactical Opportunities List based in part on tactical opportunities existing at a given time. The investment products on the Tactical Opportunities List change over time. For more information on the Focus List, Approved List, Tactical Opportunities List and Watch processes, please see the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management. Your Financial Advisor or Private Wealth Advisor can also provide upon request a copy of a publication entitled Manager Selection Process. The Global Investment Committee is a group of seasoned investment professionals who meet regularly to discuss the global economy and markets. The committee determines the investment outlook that guides our advice to clients. They continually monitor developing economic and market conditions, review tactical outlooks and recommend model portfolio weightings, as well as produce a suite of strategy, analysis, commentary, portfolio positioning suggestions and other reports and broadcasts. The GIC Asset Allocation Models are not available to be directly implemented as part of an investment advisory service and should not be regarded as a recommendation of any Morgan Stanley investment advisory service. The GIC Asset Allocation Models do not represent actual trading or any type of account or any type of investment strategies and none of the fees or other expenses (e.g. commissions, mark-ups, mark-downs, advisory fees, fund expenses) associated with actual trading or accounts are reflected in the GIC Asset Allocation Models which, when compounded over a period of years, would decrease returns. The Global Investment Manager Analysis (GIMA) Services Only Apply to Certain Investment Advisory Programs GIMA evaluates certain investment products for the purposes of some but not all of Morgan Stanley Smith Barney LLC s investment advisory programs (as described in more detail in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management). If you do not invest through one of these investment advisory programs, Morgan Stanley Wealth Management is not obligated to provide you notice of any GIMA Status changes even though it may give notice to clients in other programs. Strategy May Be Available as a Separately Managed Account or Mutual Fund Strategies are sometimes available in Morgan Stanley Wealth Management investment advisory programs both in the DISCLOSURES Page 25 of 32

26 form of a separately managed account ( SMA ) and a mutual fund. These may have different expenses and investment minimums. Your Financial Advisor or Private Wealth Advisor can provide more information on whether any particular strategy is available in more than one form in a particular investment advisory program. In most Morgan Stanley Wealth Management investment advisory accounts, fees are deducted quarterly and have a compounding effect on performance. For example, on an advisory account with a 3% annual fee, if the gross annual performance is 6.00%, the compounding effect of the fees will result in a net performance of approximately 3.93% after one year, 1 after three years, and 21.23% after five years. Conflicts of Interest: GIMA s goal is to provide professional, objective evaluations in support of the Morgan Stanley Wealth Management investment advisory programs. We have policies and procedures to help us meet this goal. However, our business is subject to various conflicts of interest. For example, ideas and suggestions for which investment products should be evaluated by GIMA come from a variety of sources, including our Morgan Stanley Wealth Management Financial Advisors and their direct or indirect managers, and other business persons within Morgan Stanley Wealth Management or its affiliates. Such persons may have an ongoing business relationship with certain investment managers or mutual fund companies whereby they, Morgan Stanley Wealth Management or its affiliates receive compensation from, or otherwise related to, those investment managers or mutual funds. For example, a Financial Advisor may suggest that GIMA evaluates an investment manager or fund in which a portion of his or her clients assets are already invested. While such a recommendation is permissible, GIMA is responsible for the opinions expressed by GIMA. See the conflicts of interest section in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management for a discussion of other types of conflicts that may be relevant to GIMA s evaluation of managers and funds. In addition, Morgan Stanley Wealth Management, MS & Co., managers and their affiliates provide a variety of services (including research, brokerage, asset management, trading, lending and investment banking services) for each other and for various clients, including issuers of securities that may be recommended for purchase or sale by clients or are otherwise held in client accounts, and managers in various advisory programs. Morgan Stanley Wealth Management, managers, MS & Co., and their affiliates receive compensation and fees in connection with these services. Morgan Stanley Wealth Management believes that the nature and range of clients to which such services are rendered is such that it would be inadvisable to exclude categorically all of these companies from an account. Consider Your Own Investment Needs: The model portfolios and strategies discussed in the material are formulated based on general client characteristics including risk tolerance. This material is not intended to be a client-specific suitability analysis or recommendation, or offer to participate in any investment. Therefore, clients should not use this profile as the sole basis for investment decisions. They should consider all relevant information, including their existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Such a suitability determination may lead to asset allocation results that are materially different from the asset allocation shown in this profile. Talk to your Financial Advisor about what would be a suitable asset allocation for you, whether CGCM is a suitable program for you. No obligation to notify Morgan Stanley Wealth Management has no obligation to notify you when the model portfolios, strategies, or any other information, in this material changes. Please consider the investment objectives, risks, fees, and charges and expenses of mutual funds, ETFs, closed end funds, unit investment trusts, and variable insurance products carefully before investing. The prospectus contains this and other information about each fund. To obtain a prospectus, contact your Financial Advisor or Private Wealth Advisor or visit the Morgan Stanley website at Please read it carefully before investing. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. The type of mutual funds and ETFs discussed in this presentation utilizes nontraditional or complex investment strategies and /or derivatives. Examples of these types of funds include those that utilize one or more of the below noted investment strategies or categories or which seek exposure to the following markets: (1) commodities (e.g., agricultural, energy and metals), currency, precious metals; (2) managed futures; (3) leveraged, inverse or inverse leveraged; (4) bear market, hedging, long-short equity, market neutral; (5) real estate; (6) volatility (seeking exposure to the CBOE VIX Index). Investors should keep in mind that while mutual funds and ETFs may, at times, utilize nontraditional investment options and strategies, they should not be equated with unregistered privately offered alternative investments. Because of regulatory limitations, mutual funds and ETFs that seek alternative-like investment exposure must utilize a more limited investment universe. As a result, investment returns and portfolio characteristics of alternative mutual funds and ETFs may vary from traditional hedge funds pursuing similar investment objectives. Moreover, traditional hedge funds have limited liquidity with long lock-up periods allowing them to pursue investment strategies without having to factor in the need to meet client redemptions and ETFs trade on an exchange. On the other hand, mutual funds typically must meet daily client redemptions. This differing liquidity profile can have a material impact on the investment returns generated by a mutual or ETF pursuing an alternative investing strategy compared with a traditional hedge fund pursuing the same strategy. Nontraditional investment options and strategies are often employed by a portfolio manager to further a fund s investment objective and to help offset market risks. However, these features may be complex, making it more difficult to understand the fund s essential characteristics and risks, and how it will perform in different market environments and over various periods of time. They may also expose the fund to increased volatility and unanticipated risks particularly when used in complex combinations and/or accompanied by the use of borrowing or leverage. DISCLOSURES Page 26 of 32

27 KEY ASSET CLASS CONSIDERATIONS AND OTHER RISKS Investing in the markets entails the risk of market volatility. The value of all types of investments, including stocks, mutual funds, exchange-traded funds ( ETFs ), closed-end funds, and unit investment trusts, may increase or decrease over varying time periods. To the extent the investments depicted herein represent international securities, you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets and frontier markets. Small- and mid-capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. In addition, the securities of small- and mid-capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. The value of fixed income securities will fluctuate and, upon a sale, may be worth more or less than their original cost or maturity value. Bonds are subject to interest rate risk, call risk, reinvestment risk, liquidity risk, and credit risk of the issuer. High yield bonds are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. In the case of municipal bonds, income is generally exempt from federal income taxes. Some income may be subject to state and local taxes and to the federal alternative minimum tax. Capital gains, if any, are subject to tax. Treasury Inflation Protection Securities (TIPS) coupon payments and underlying principal are automatically increased to compensate for inflation by tracking the consumer price index (CPI). While the real rate of return is guaranteed, TIPS tend to offer a low return. Because the return of TIPS is linked to inflation, TIPS may significantly underperform versus conventional U.S. Treasuries in times of low inflation. There is no guarantee that investors will receive par if TIPS are sold prior to maturity. The returns on a portfolio consisting primarily of environmental, social, and governance-aware investments ( ESG ) may be lower or higher than a portfolio that is more diversified or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. The companies identified and investment examples are for illustrative purposes only and should not be deemed a recommendation to purchase, hold or sell any securities or investment products. They are intended to demonstrate the approaches taken by managers who focus on ESG criteria in their investment strategy. There can be no guarantee that a client's account will be managed as described herein. Options and margin trading involve substantial risk and are not suitable for all investors. Besides the general investment risk of holding securities that may decline in value and the possible loss of principal invested, closed-end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance and potential leverage. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. NAV is total assets less total liabilities divided by the number of shares outstanding. At the time an investor purchases shares of a closed-end fund, shares may have a market price that is above or below NAV. Portfolios that invest a large percentage of assets in only one industry sector (or in only a few sectors) are more vulnerable to price fluctuation than those that diversify among a broad range of sectors. Alternative investments often are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time. They may be highly illiquid and can engage in leverage and other speculative practices that may increase the volatility and risk of loss. Alternative Investments typically have higher fees than traditional investments. Investors should carefully review and consider potential risks before investing. Certain of these risks may include but are not limited to: Loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices; Lack of liquidity in that there may be no secondary market for a fund; Volatility of returns; Restrictions on transferring interests in a fund; Potential lack of diversification and resulting higher risk due to concentration of trading authority when a single advisor is utilized; Absence of information regarding valuations and pricing; Complex tax structures and delays in tax reporting; Less regulation and higher fees than mutual funds; and Risks associated with the operations, personnel, and processes of the manager. As a diversified global financial services firm, Morgan Stanley Wealth Management engages in a broad spectrum of activities including financial advisory services, investment management activities, sponsoring and managing private investment funds, engaging in broker -dealer transactions and principal securities, commodities and foreign exchange transactions, research publication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Management therefore engages in activities where Morgan Stanley Wealth Management s interests may conflict with the interests of its clients, including the private investment funds it manages. Morgan Stanley Wealth Management can give no assurance that conflicts of interest will be resolved in favor of its clients or any such fund. All expressions of opinion are subject to change without notice and are not intended to be a forecast of future events or results. Further, opinions regarding Alternative Investments expressed herein may differ from the opinions expressed by Morgan Stanley Wealth Management and/or other businesses/affiliates of Morgan Stanley Wealth Management. This is not a "research report" as defined by NASD Conduct Rule 2711 and was not prepared by the Research Departments of Morgan Stanley Smith Barney LLC or Morgan Stanley & Co. LLC or its affiliates. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements. Clients should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. While the HFRI indices are frequently used, they have limitations (some of which are typical of other widely used indices). These limitations include survivorship bias (the returns of the indices may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately reflect the performance of a described style); and limited data (many hedge funds do not report to indices, and the index may omit funds, the inclusion of which might significantly affect the performance shown. The HFRI indices are based on information self-reported by hedge fund managers that decide on their own, at any time, whether or not they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indices may not be complete or accurate representations of the hedge fund DISCLOSURES Page 27 of 32

28 universe, and may be biased in several ways. Composite index results are shown for illustrative purposes and do not represent the performance of a specific investment. Individual funds have specific tax risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice. Interests in alternative investment products are offered pursuant to the terms of the applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain of its affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley or any of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investment risks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer, not a bank. This material is not to be reproduced or distributed to any other persons (other than professional advisors of the investors or prospective investors, as applicable, receiving this material) and is intended solely for the use of the persons to whom it has been delivered. This material is not for distribution to the general public. Past performance is no guarantee of future results. Actual results may vary. SIPC insurance does not apply to precious metals, other commodities, or traditional alternative investments. Interests in alternative investment products are offered pursuant to the terms of the applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain of its affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley or any of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investment risks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer, not a bank. In Consulting Group s advisory programs, alternative investments are limited to US-registered mutual funds, separate account strategies and exchange-traded funds (ETFs) that seek to pursue alternative investment strategies or returns utilizing publicly traded securities. Investment products in this category may employ various investment strategies and techniques for both hedging and more speculative purposes such as short-selling, leverage, derivatives and options, which can increase volatility and the risk of investment loss. Alternative investments are not suitable for all investors. As a diversified global financial services firm, Morgan Stanley Wealth Management engages in a broad spectrum of activities including financial advisory services, investment management activities, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Management therefore engages in activities where Morgan Stanley Wealth Management s interests may conflict with the interests of its clients, including the private investment funds it manages. Morgan Stanley Wealth Management can give no assurance that conflicts of interest will be resolved in favor of its clients or any such fund. Alternative investments involve complex tax structures, tax inefficient investing, and delays in distributing important tax information. Individual funds have specific risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice. While the HFRI indices are frequently used, they have limitations (some of which are typical of other widely used indices). These limitations include survivorship bias (the returns of the indices may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately reflect the performance of a described style); and limited data (many hedge funds do not report to indices, and the index may omit funds, the inclusion of which might significantly affect the performance shown. The HFRI indices are based on information self-reported by hedge fund managers that decide on their own, at any time, whether or not they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indices may not be complete or accurate representations of the hedge fund universe, and may be biased in several ways. It should be noted that the majority of hedge fund indexes are comprised of hedge fund manager returns. This is in contrast to traditional indexes, which are comprised of individual securities in the various market segments they represent and offer complete transparency as to membership and construction methodology. As such, some believe that hedge fund index returns have certain biases that are not present in traditional indexes. Some of these biases inflate index performance, while others may skew performance negatively. However, many studies indicate that overall hedge fund index performance has been biased to the upside. Some studies suggest performance has been inflated by up to 260 basis points or more annually depending on the types of biases included and the time period studied. Although there are numerous potential biases that could affect hedge fund returns, we identify some of the more common ones throughout this paper. Self-selection bias results when certain manager returns are not included in the index returns and may result in performance being skewed up or down. Because hedge funds are private placements, hedge fund managers are able to decide which fund returns they want to report and are able to opt out of reporting to the various databases. Certain hedge fund managers may choose only to report returns for funds with strong returns and opt out of reporting returns for weak performers. Other hedge funds that close may decide to stop reporting in order to retain secrecy, which may cause a downward bias in returns. Survivorship bias results when certain constituents are removed from an index. This often results from the closure of funds due to poor performance, blow ups, or other such events. As such, this bias typically results in performance being skewed higher. As noted, hedge fund index performance biases can result in positive or negative skew. However, it would appear that the skew is more often positive. While it is difficult to quantify the effects precisely, investors should be aware that idiosyncratic factors may be giving hedge fund index returns an artificial lift or upwards bias. Hedge Funds of Funds and many funds of funds are private investment vehicles restricted to certain qualified private and institutional investors. They are often speculative and include a high degree of risk. Investors can lose all or a substantial amount of their investment. They may be highly illiquid, can engage in leverage and other speculative practices that may increase volatility and the risk of loss, and may be subject to large investment minimums and initial lockups. They involve complex tax structures, tax-inefficient investing and delays in distributing important tax information. Categorically, DISCLOSURES Page 28 of 32